ACA Chairman Steve Friedman and Vice Chairman James Bruder Lead ACA Team In Face-To-Face Meetings With FCC Officials

Visiting the nation's capital amid telltale signs of swift and likely lasting change in the communications sector, senior officials of the American Cable Association recently held face-to-face discussions with top Federal Communications Commission officials and staff members to emphasize that small, independent cable operators offering video and broadband services conduct business in an arena dominated by broadcast and programming conglomerates that routinely employ a variety of discriminatory practices that invariably injure consumers in rural communities served by ACA members.

"ACA greatly appreciates that FCC officials provided us the time and opportunity to share our perspective on key issues in our industry, from retransmission consent abuses and one-sided cable programming contracts to discriminatory Internet business models like ESPN360 to the manifold consumer harms inherent in the proposal to give Comcast Corp. majority control of NBC Universal," American Cable Association President and CEO Matthew M. Polka said.

On Dec. 7, ACA leaders sat down for discussions with FCC member Meredith Attwell Baker and two top Baker advisers; two top advisers of FCC member Michael Copps; and National Broadband Plan Executive Director Blair Levin and members of his team, who are hard at work trying to meet the Feb. 17 statutory deadline to deliver their highly anticipated report to Congress.

In the meetings, ACA officials explained that the Internet's promise of true consumer sovereignty across many market sectors, especially multichannel video, has not occurred because media conglomerates have refused to facilitate consumer choice in a meaningful way.

ACA officials noted that ESPN360, owned by the Walt Disney Co., demands that broadband access providers pay a fee based on every broadband subscriber served. Customers with no intention of viewing ESPN360 on the Internet still have to pay, and it means non-sports fans have to subsidize the minority who spend many hours watching ESPN360, ACA officials said.

They added that consumers should not be blocked from viewing ESPN360 unless their broadband access provider has cut a deal with Disney. They also noted that if ESPN360's closed Internet business model became the norm, the price of broadband would rise, putting the cost of this crucial technology beyond the reach of those on the lower end of the income scale.
Regarding the proposed Comcast-NBCU transaction, ACA officials identified a number of concerns, explaining that without forced divestitures or conditions, Comcast-NBC Universal will wield its enhanced market power to drive up artificially the per-subscriber cost of its programming, particularly its newly acquired local broadcast stations and its "must-have" national and regional cable networks that air live sporting events.
ACA officials noted that without restrictions, the new media conglomerate will use its bargaining power to force other pay-television providers to distribute its programming on basic tiers, regardless of consumer interest in the content. ACA also raised concerns that Comcast-NBC Universal will be able to force its preferred business model for online video distribution upon others, regardless of whether such a model would naturally develop in a competitive market.

In the filing, ACA urged the FCC to open a proceeding to examine local marketing agreements (LMAs), which broadcasters have been using to attain even more bargaining power over small, independent cable operators in negotiations for signal carriage through retransmission consent.

LMAs enable one broadcaster to negotiate retransmission consent on behalf of two or more broadcasters within the same local market, even though FCC rules generally prohibit common ownership of two TV stations in the same local market to protect consumers and advertisers from anti-competitive conduct by broadcasters. In the same filing seeking an LMA probe, ACA also asked the FCC to permit cable operators to carry local broadcast signals while retransmission consent complaints are pending before the agency.

ACA officials also stressed that the owners of the most popular cable networks continue to use their power to attain contracts with unreasonable terms and condition, such as requiring ACA members to pay more for content than larger providers against whom they compete locally. Media conglomerates, ACA officials added, also insist that their cable networks reside on tiers that all or nearly all subscribers must purchase, which results in consumers paying for channels they never watch.

"We believe ACA got its message across to FCC leaders that broadcasting and cable programming entities exercise insurmountable bargaining power in their negotiations with smaller cable operators, which leads to escalating cable rates," Polka said. "We also stressed that the more ACA members are coerced into pay more and more for unwanted content, the less capital they will have to invest in broadband infrastructure in rural communities, which are striving to catch up with the fast download speeds offered to consumers in urban markets."